Student-loan burdens are upending the homeownership dream – Orange County Register

By Alex Tanzi | Bloomberg

An essential part of the “American Dream” is buying a home, paying it off over time and retiring with hundreds of thousands of dollars in home equity.

Student loan burdens flip this scenario, according to a study from the Jain Family Institute that found that high student debt has become a major obstacle to buying a home — especially among young borrowers with relatively high incomes.

The research raises questions about the value of a university degree. For young adults earning $100,000 or more, higher student debt corresponds to lower home ownership in each year of the 10-year study.

Overall, the homeownership rate among student borrowers ages 18 to 35 declined 24% in the decade to 2019, according to the report. People living in black and Asian communities experienced the largest decline — even when they started at the lowest rates in 2009.

Owning a home has traditionally played a major role in building the financial security of millions of Americans. In 2019, homeowners’ average net worth was $255,000, compared to $6,300 for renters or others, according to a 2020 survey of consumer finance from the Federal Reserve.

The freeze on student loan payments since the start of the pandemic — which was recently extended for another three months — may have enabled some middle- and high-income student loan borrowers to buy a home, researcher Edward Neelagh, author of the Jain Report, said by email. But the sharp rise in home prices was also a deterrent.